I have personal experience of trying to keep a business afloat via a government-backed bank loan scheme during the last credit crisis.
If the hoops I had to go through were repeated today I understand why there was not too much take up on these facilities, but not through a lack of trying.
Indeed, the decision to loosen the criteria on Friday will hopefully release liquidity more quickly into the market for businesses that require it.
Looking further afield, the US is in turmoil following denial from the very top until early March that Covid-19 was going to be an issue.
We know that when this powerhouse struggles, ripples will be felt throughout the global economy.
By the time the 2008 crisis had turned the corner, it had caused the unemployment of approximately nine million people in the US.
In two weeks US unemployment has doubled to approximately 6.6 million, with Bank of America stating the US “could see the deepest recession on record”, and some estimating unemployment of up to twenty million people by the time this is over.
For our industry, clearly there are issues.
Wholesale funded originators are both reducing risk and, in some cases, pulling their entire product range while markets are in turmoil.
Hopefully, those affected will come back stronger once things stabilise – the market needs innovators and lenders that can help non-standard, but worthy mortgage applicants.
And I hope intermediaries will appreciate the different funding that specialist lenders rely on compared with deposit takers and so will show empathy with these lenders in what is a hugely difficult situation.
A market that may be unexpectedly affected is later life lending where there is currently a focus on face-to-face interaction during the sales process to ensure the borrowers have the right advice for their circumstances.
We have seen the Equity Release Council expand its guidance to allow the use of video interviews in some cases that can be stored for viewing as necessary at a later date.
Delaying inevitable bubble burst
Although a hugely positive measure for those that need it, payment holidays for mortgage holders could be open to abuse.
Those with larger mortgage payments could easily fund home improvements or buy a car through missing three months mortgage payments without affecting their credit rating.
The recent news that overdrafts and credit card debts may go down a similar line I reservedly welcome.
But the fact unsecured lending has been so easily available with so few checks for so long does make me wonder whether we are putting off an inevitable burst of a bubble that may have happened anyway.
However, these policies will undoubtedly assist many borrowers who genuinely need it.
We have further challenging times ahead, but with a focus on our staff, customers and the wider community in general, we will come through this, albeit unfortunately many people we know may have suffered difficult personal and commercial times.
We have to concentrate on today, but we need to continue to plan for trading in whatever tomorrow may bring so we can get our industry back on its feet as quickly as possible.